Monroe-Irwin v. Brown

THOMPSON, J. The plaintiff has appealed from a judgment which was rendered against her in a suit to cancel a deed and contract involving the title to an apartment house in Los Angeles, which instruments were alleged to have been procured by fraud.

The complaint alleges that the plaintiff was the owner of the three-story Romanesque Villa Apartments at Number 1309 North Harper Street in Los Angeles, of the value of $100,000, subject to a first trust deed to secure an indebtedness of $37,000; that the building is situated in an exclusive Hollywood district; that several apartments were then leased and the property when fully occupied has a rental value of $15,900 per year. It is asserted the defendant Junior Realty Company, Ltd., formerly Junior Capital Company, Ltd., a real estate firm of Los Angeles, falsely and fraudulently represented to plaintiff that it had a long list of tenants waiting for apartments and if she would convey to the realty company one-half interest in the building and enterprise, give to it exclusive control and management of the business and join in a note secured by a second mortgage on the property to secure a loan of $9,500, with which to pay interest, taxes, operating expenses and costs of repairing and remodeling the building, it would pay to her $500 in cash and it could and would procure the immediate rental of the apartments at prices which would pay all interest on indebtedness, together with taxes and costs of maintenance and claims for improvements, so as to net plaintiff as her share of the profits the sum of $900 per month, and that the company would also procure a “responsible purchaser of the property” at a selling price which would furnish the plaintiff a “substantial profit.”

It is further alleged that the plaintiff, relying upon those representations, executed and delivered to the company the contract dated November 21, 1936, which is marked Exhibit “A” and attached to the complaint. By the terms of that instrument the plaintiff agrees to convey to the company one-half of her interest in the property and to join in a promissory note for the loan of $9,500, secured by a second trust deed on the property. It also covenants to grant to the realty company immediate and exclusive possession and control of the property and of the funds borrowed and received there[70]from, subject only to the rendering of periodical statements of accounts and the payments of plaintiff’s share of the profits. Absolute control of the repairs, renovation, painting, remodeling and renting of the property'is conferred upon the company, together with the duty to determine and pay all debts and claims incident thereto.